(CPA) certification is a proof of the accountant’s expertise in auditing, taxation regulatory compliance, taxation, as well as financial analyses. Employers are more likely to employ accountants with CPA certification. With the CPA certification, accounting professionals will be able to enhance their career prospects as well as their job security

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The American Institute of Certified Public Accountants (AICPA) as well as Prometric, the National Association of State Boards of Accountancy (NASBA), and Prometric are the nation’s regulatory body for the CPA test. However each U.S. region has its own requirements for certified public accountants.

What Are the Certified Public Accountant Requirements?

The 55 certification-granting U.S. jurisdictions, including the 50 states, Washington D.C., Puerto Rico, Guam, the Virgin Islands, and the Mariana Islands, maintain specific CPA requirements. In all 55 jurisdictions CPA certification requires 150 college credits as well as successfully passing an exam called the Uniform CPA Examination.

Other CPA requirements differ across jurisdictions such as residency and age prerequisites, ethics examinations and the number and kind of accounting-specific credits. The requirements for credit to sit for the CPA test also differ from district to district. Some jurisdictions offer preliminary CPA exam certification to applicants with 120 college credits . However, they only once candidates have completed 150 credits.

Educational CPA Requirements

The process of becoming an CPA is a requirement for 150 credits in college. This includes 30 accounting credits as well as 24 credits in business administration. A minimum of 15 credits must be upper division of graduate or higher. A typical bachelor’s program consists of only 120 credits. This leaves the student with 30 credits more after obtaining their bachelor’s degree.

An aspirant CPA is able to earn an additional 30 credits required to earn an advanced degree or a graduate certificate. The amount and types of accounting-specific credits needed to be a CPA differs by state. Some of the courses that qualify are taxation, auditing, as well as management accounting.

Certified Public Accountant (CPA) Ethics

CPAs certified by the APCIA are bound to a code of conduct. The APCIA demands that all CPA certificate holders follow the Code of Professional Conduct, which defines the ethical guidelines CPAs must follow.

The Enron scandal is a prime illustration that shows CPAs not adhering to the code. Arthur Andersen company executives and CPAs were accused of unprofessional and illegal accounting practices. State and federal laws require CPAs to remain independent when conducting reviews and audits. When consulting with Enron, Arthur Andersen CPAs were not independent and provided both consulting and auditing in violation of the CPA ethics code.

The CPA designation is now more prominent following the Sarbanes-Oxley (SOX) Act of 2002, passed partly as a response to financial scandals involving corporations, such as the Enron scandal.

History of the Certified Public Accountant (CPA)

In 1887, accountants from 31 countries founded in 1887 the American Association of Public Accountants (AAPA) to establish ethical guidelines for accounting profession as well as U.S. Auditing requirements for state, local and federal governments as well as private firms and non-profit organizations. Names changed over the years, the association was called”the” American Institute of Certified Public Accountants (AICPA) since the year 1957. The first CPAs obtained licenses in 1896. 23

In 1934 in 1934, in 1934, the Securities and Exchange Commission (SEC) mandated that all publicly traded corporations to prepare periodic financial statements that were endorsed by an accounting profession. The AICPA established standards for accounting until 1973, when they were replaced by the Financial Accounting Standards Board (FASB) was established to establish the standards for private companies.

The accounting sector flourished during the 1990s, because of large companies in the field expanding their offerings to include a variety of consulting. The Enron scandal of 2001 brought about major changes to the field of accounting, including the reality the Arthur Andersen, one of the most prestigious accounting firms in the country was shut down. In the Sarbanes-Oxley Act, which was approved in 2002 accountants were enshrined under stricter regulations regarding their consulting obligations.

To be an CPA to work in the United States, the candidate must take and successfully pass the Uniform Certified Public Accountant Examination (Uniform CPA Exam), that is set by the American Institute of Certified Public Accountants (AICPA) and is administered through the National Association of State Boards of Accountancy (NASBA). This Uniform CPA Exam consists of the sections Auditing, and Attestation (AUD), Financial Accounting and Reporting (FAR) Regulation (REG) along with the Business Environment Concepts (BEC). This CPA qualification was originally enacted by law in New York State on April 17th 1896.

Prior to 1917, each state had their own licensing exams which allowed accountants to be awarded the CPA certification, however this was different from state to the state. Exams were conducted in order to increase professionalism within accountants, to verify the eligibility to practice accounting and to allow individuals to gain membership to the Institute of Public Accountants (IPA). In response to these reasons the first exam that was uniform was conducted between June 14 and 15 in 1917. It was a four-part exam including Auditing Commercial Law, Accounting Theory and Practice Part 1 Part 1 and Accounting Theory and Practice Part 2. Its Commercial Law and Accounting Theory and Practices sections were the precursors of those of the REG (Business Law and Tax) and FAR (Financial Accounting) sections. They were Auditing, Business Law, and Accounting Theory exam segments were each 3.5 hours long and made up 10.5 hours. It was also worth noting that the Accounting Practice Parts I and II were each 4.5 hours and totaled up to 9 hours. The states all began with the same CPA exam that was administered by the organization that would later be renamed the AICPA by 1952. Calculators were prohibited on the exam up to 1994. 

Before 2004, candidates were required to pass the four sections of the CPA test in the space that was two full days. In 2004, following a recommendations from the AICPA the CPA, there was a change to take the four sections on different times. Also , in 2004 the CPA exam was changed from pencil and paper in order to be an online exam. The move to online format allowed the test to assess the application of technology and skills via exercises based on tasks. It also resulted in the increasing importance of information technology in relation to risk assessment and internal control. 

Although not as important as the changes expected in 2024 however, the CPA exam underwent some modifications in 2017. The most significant change in 2017 was in the amount of knowledge needed to answer the questions. Prior to 2017, exams on the CPA test the candidates on their ability to remember and comprehend the subject. Understanding and remembering correspond to lower levels in Bloom’s Taxonomy. Beginning in 2017, exam takers sought to add tests that test more advanced levels in Bloom’s Taxonomy. This meant that the number of questions that test memory and comprehension was decreased, and questions that assessed the ability of an applicant to analyse and apply of skills was included in the CPA test. Examiners recognized that employers of the new CPAs will require the ability to analyze and the application of knowledge instead of just basic recall and comprehension. 

In particular specifically, specifically, the Regulation (REG) part of the CPA exam was modified in the year 2017. Although it is true that the REG part of the CPA exam is not a test of the most advanced levels of Bloom’s taxonomy 60-80 percent of questions in the test’s analysis and application. The exam only tests 25 to 35 percent of the questions. are based on understanding and remembering in the wake of the new changes of the examination. Before the change, a large majority of questions test memory and comprehending. In the Auditing and Attestation (AUD) section tests the most advanced level of Bloom’s Taxonomy through test questions. Additionally to that, the REG exam was given more time in the updated version of four hours instead of three for the previous test. The version for 2017 has the requisite 76 multiple-choice questions as well as between eight and nine task-based simulations that further enhance learning through application. 

In the year 2019 in 2019, the AICPA conducted a research study that found that CPAs required an enhanced knowledge of excel, data analytics and general technological capabilities.  While the CPA exam tests knowledge of information technology, employers felt that the exam was not sufficiently examined.  This resulted in the creation of the exam for 2024 which is also known as The Core Discipline Model. Beginning in 2024 the majority of CPA candidates will be required to pass the same three main sections: Accounting Taxation, Auditing and Taxation. After that, each candidate will be given the option of Taxation Compliance as well as Planning, Business Reporting and Analysis as well as Information Systems Control. The new system allows candidates to demonstrate more understanding of the material while testing the accounting fundamentals principles. The new model will also permit candidates to show a thorough understanding of technology, analytical abilities, advanced problem-solving abilities and sound professional judgement which is a crucial capability in the professional and workplace. 

The requirements for sitting an exam called the Uniform CPA Exam is determined by state boards of accounting. A number of states have adopted what’s called “the “150 hour rule” (150 college semester units, or the equivalent),  that typically will require an extra year’s study beyond a standard four-year college degree or a master’s level degree. Some schools offer a five-year master’s and bachelor’s degree in a single program which allows students to complete both degrees at the same time, while gaining the required 150 hours to pass the exam.

The Uniform CPA Exam tests the general rules of state law like the laws of contract and agency (questions are not adapted to the particular laws of any one state) and certain federal laws too. 

Other certification and licensing requirements

While the CPA examination is uniform the licensing and certification requirements are different according to each state’s laws , and consequently vary from state the state.

The requirements of the state for the CPA certification can be described into the Three E’s–Education examination, Education and Experience. The educational requirement must typically be met as part of the criteria for eligibility to take an exam called the Uniform CPA Exam. The exam component will be that of the Uniform CPA Exam itself. Certain states have a dual-tier system that allows an individual to be certified first, usually through taking an exam called the Uniform CPA Examination. This person would then become licensed after a certain amount of work experience has been completed. Some states operate a single-tier system that allows an individual to be licensed and certified at the same time , once both the CPA exam has been completed and the requirement for work experience is met.

Two-tier states are Alabama, Florida, Illinois, Montana, and Nebraska. It is expected for states with two tiers to move gradually toward a single-tier system. Since 2002, state boards of accounting in Washington as well as South Dakota have ceased issuing CPA “certificates” and instead issue CPA “licenses”. Illinois was planning to follow in 2012.

Some states are two-tiered but need work experience for the CPA certificate, like Ohio as well as Pennsylvania.

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The experience component differs between states:

The two-tier states typically don’t require that an applicant have experience working before obtaining the CPA certificate. (Work experience is necessary, however, in order to obtain an authorization in order to be a CPA.)

Certain states, like Massachusetts do not require the requirement to work experience for individuals with an academic degree that is higher than with the requirement of the State that you appear to an exam called the Uniform CPA.

A majority of states require experience in the open accounting kind, such as two years of audit or tax experiences, or even a mixture of both. A growing number of states such as Oregon, Virginia, Georgia and Kentucky will accept work experiences of a more general type in the area of accounting. In Texas there is only one year of accounting experience in the direction of an CPA is required. The experience doesn’t need been in the public sector of accounting. This permits people to get CPA certification. CPA certification while they work in an organization’s finance department.

Most states require that an applicant’s work experience to be confirmed by a person who is certified as an CPA. This can create problems when applicants are from outside of the United States. But, certain states, like Colorado and Oregon also allow work experience that has been certified by an Chartered Accountant.